Ahold Will Remain Cautious

By Robert Van den Oever

Not that Ahold needed the money, but selling its 60% stake in Scandinavian joint venture ICA for $3.27 billion will bring in extra cash for other purposes.

The war-chest enhancing divestment comes at a strange time, in a way. Ahold has plenty of ready money, yet it’s repeatedly said it’ll be careful with acquisitions, aiming only for small add-on targets in regions where it’s already established.

Moreover, during 2012, Ahold has been actively managing its cash position by putting its excess cash to better use than just sitting in the bank. The €2.6 billion it had at the end of 2011 was brought down to €1.6 billion by the end of the third quarter in 2012 by raising the dividend, paying down maturing bonds and making small acquisitions, like the €350 million purchase of Dutch online retailer Bol.com.

“The question now is, what is next?”, said KBC analyst Pascale Weber. “The war chest will be massive.” Ms Weber expects Ahold to do further acquisitions, share buy-backs or pay an exceptional dividend.

But it’s unlikely Ahold will become a hunter for big prey. Investing will be done in a moderate, sensible way. Chief executive Dick Boer will certainly not overpay for acquisitions. He worked for Ahold during the acquisition-hungry years before the accounting scandal of 2003 that rocked the company and ousted the board.

Back then, Mr. Boer headed the successful Dutch flagship supermarket chain Albert Heijn. His sensible, thoughtful and cautious way of proceeding helped Albert Heijn grow into the market leader in the Netherlands. And it has brought him to the very top of Ahold.

Investors believe that Mr. Boer’s cautious management style will help grow the group further. For now they’re not urging him to embark on an expensive shopping spree. History has shown that both Ahold and Mr. Boer perform best by taking things slowly.

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